Many business owners think that employee personnel records are simply for the storage of disciplinary forms, but in reality, an employee’s personnel file should be much more than that. From a legal standpoint, an employee’s personnel file is your insurance in the event of a lawsuit or other legal action. From an organizational standpoint, the personnel records are the best way for your company to keep up-to-date information about all of your staff.
Employee Personnel Records: An Employee is Entitled to a Copy
A few years ago, one of my clients was successful in a lawsuit over his employee personnel record; his employer refused to make a copy of the file, which is illegal. Every employee has a right to know what types of information are kept about him or her, which means that you should do everything in your power to be sure that it is accurate. It is also your responsibility to make sure those records are inaccessible to non-management personnel who could use the employee’s personal information (i.e. social security number, address, birthdate, etc.) for nefarious purposes.
Employee Personnel Records: All Signed Paperwork Should be Included
Even if you keep certain paperwork — such as background check permissions — in another file, a copy of all signed paperwork should be included in individual employee personnel files. This serves thre important purposes. First, it will enable you to find all information quickly if necessary without digging through other paperwork in order to find what you need. Second, since employees are entitled to a copy, it allows you to retrieve specific paperwork for that employee. And third, if you are ever audited or sued, you can produce the information and prove that it is kept current and accessible.
Employee Personnel Records: Benefits & Tax Forms Must be Included
Anything that pertains to employment should be kept in an employee’s personnel file. This includes information related to benefits and tax forms. For example, your employees should all have filled out a W-4 form as well as any immigration paperwork (if applicable). Those information must be easily produced should the IRS or Immigration have any questions regarding your staff. You should also be able to quickly find out what types of benefits your employees receive, such as healthcare, stock options, 401(k)’s and profit sharing.
Employee Personnel Records: Standard Forms
Another part of your employees’ personnel files should be standard forms that are used universally through your HR department. If your company gives annual or semi-annual reviews, those forms should be included in the files. Disciplinary forms, salary increase orders, performance reviews and the original employment application should all be copied to individual personnel files.
Employee Personnel Records: Notes
This is something that all employers should have in their employee records, but which many ignore. From a legal standpoint, your company is covered best when everything — no matter how minor — is well-documented in writing. For example, let’s say that John Doe has been giving his supervisor some problems, but not enough that a disciplinary form needs to be filled out. In case you have to fire John Doe at a later date, you should make notes in his personnel file about insubordination or whatever other problems he’s been giving his supervisor. This is your best defense against a wrongful termination lawsuit.
